Future of some electronic pulltabs in jeopardy after Minnesota Court of Appeals ruling

The Minnesota Gambling Control Board improperly allowed an "open-all" feature on electronic pulltabs, the state Court of Appeals ruled Monday, siding with the state's American Indian tribes.

The Shakopee Mdewakanton Sioux Community brought the matter to the appeals court after initially challenging the open-all function in 2019, arguing it mimics slot machines, which the state's tribes are allowed to operate exclusively. With that function, a user hits one button, cascading rows open to animated characters and players can win bonus rounds.

Monday's ruling reversed an administrative law judge's decision that found the open-all provision was legal. The decision could renew a legislative push to clarify the law, explicitly banning the open-all feature. DFL control of state government makes the prospect of such a ban more likely than in recent years under divided control.

The Shakopee tribe, which had long contended the rule was illegal, welcomed Monday's ruling and called for legislative action. "We call on the Gambling Control Board and the Minnesota Legislature to take this opportunity to resolve this problem and others related to the regulation of electronic pull-tabs for good," the statement said.

At issue are emails from the Minnesota Gambling Control Board in 2019. On March 13, the board sent an email saying it would no longer approve electronic pulltabs with the open-all function. On March 22, the board reversed itself and told vendors it would consider pulltabs with the open-all function on a case-by-case basis.

The board argued that the emails did not create a new rule and merely communicated a policy that decisions would be made case-by-case. "We are not persuaded," said the court's 21-page ruling written by Judge Elise Larson for a panel that included Judges Diane Bratvold and Theodora Karin Gaïtas.

Gambling Control Board Executive Director Tim Mahoney said "it's hard to put the horse back in the barn" with electronic pulltabs, but he also didn't think changing them would be a big deal.

Mahoney said the board wants to see whether the Legislature changes the law before it decides whether to appeal to the state Supreme Court. The high court, however, is not required to automatically take the case.

The Legislature legalized electronic pulltabs in 2012 as part of legislation to build the $1.1 billion U.S. Bank Stadium with the Minnesota Vikings. The change defined electronic pulltabs at bars and restaurants, saying they require that a player "activate or open each electronic pull-tab ticket and each individual line, row, or column of each electronic pull-tab ticket," the court's ruling noted.

The Legislature gave the Gambling Control Board the authority to adopt rules and required vendors to submit new games for approval. The board first approved a game with the open-all feature in 2015, the court noted.

The 2019 emails constituted rule-making outside the normal procedures, the court said. The Gambling Control Board argued, however, that the rule was valid because it adhered to a long-standing policy of approving the open-all games.

The court disagreed, saying the record was unclear as to when the board adopted a rule allowing the open-all feature and therefore it's invalid. "Without knowing the date that the board adopted the rule, it is difficult to conclude that the interpretation is longstanding." the court said.

Electronic pulltabs have benefitted many, but not the tribes, the statement said. Among those who have benefitted, the statement cited the stadium, the Minnesota Vikings, charitable gambling, bars and restaurants and game manufacturers.

Rep. Zack Stephenson, DFL-Coon Rapids, introduced a bill in a previous session to return pulltabs to their original intent. Bars, restaurants and charities denounced the change, saying it would hurt their businesses.

Asked last Tuesday whether he planned to introduce a bill this session, Stephenson was noncommittal, saying merely that there were ongoing discussions.

Initially, revenue from electronic pulltabs trickled in, but consumers adapted and the revenue has fueled a huge surplus in the U.S. Bank Stadium reserve fund that was set up to support the bonds issued for the building. The fund is so robust that Gov. Tim Walz has proposed using it to pay off the stadium this year, only seven years after it opened.

Paper pulltabs still reign. In the 2022 fiscal year, paper pulltabs brought in $2.1 billion in gross receipts, up from $1.7 billion the previous year. In fiscal 2022, electronic pulltabs brought in $1.9 billion, up from $1.3 billion the previous year.